This is the time to be an entrepreneur. Never has it been easier to register a business, engage the public and perhaps most importantly – raise money. Thanks to the (rather sudden) rise of the FinTech marketplace, thousands of entrepreneurs are able to participate in a streamlined lending process that’s no longer bogged down by tedious paperwork and idle time. Here are three FinTech Developments that will continue to benefit borrowers in the long run.
1. ALL Generations Are Now Embracing and Relying on Mobile Tech
From checking weather reports to doing some last-minute holiday shopping, we are using our mobile devices for virtually everything. Thanks to FinTech, we can now lend and borrow just as conveniently. The nine-to-five banking and financing days are all but completely minimized. Most early-stage growth companies are strapped for time, but their need for financing is arguably greater today than it ever has been before. Businesses are looking to skip the chit-chat and use their time more efficiently – especially Millennials.
2. Despite Looming Interest Rate Hikes Ahead, Entrepreneurs Will Still Seek Capital
Entrepreneurship is not going anywhere. Furthermore, higher interest rates make it more profitable for conservative lenders to open up the purse strings. When lending is profitable, banks will provide capital. This is likely to cause a significant spike in fundraising interest in general and businesses will listen to all options on the table.
3. The Industry is Retooling and Becoming More Reliable
Despite scrutiny, the FinTech industry is without a doubt working. Growth companies are receiving funding and lenders are being rewarded with hard profits. It’s a great time to be a borrower. Costs are lower for lenders and for borrowers, and capital is absolutely available. Loans are being processed more quickly than ever before. We are long past the 1950s way of banking and we’re never going back. The FinTech marketplace has also proven to be a great alternative for under-served communities and minority-owned businesses.
Even if you know your product/concept inside and out, there are still many potential pitfalls to speaking in front the throne of venture capital. It’s not the time to be short-sighted, it’s best to understand your product through the eyes of someone else. Here are three steps to a perfect elevator pitch.
1. Narrow Your Idea Down
As the old adage goes, less is more – and the same is true in this case. You never want to give up your whole pitch right off that bat. Find a good opening sentence and let it sink in among your audience. If they ask anything further, mission accomplished. If you are having trouble narrowing it down, ask your friends and colleagues how they would describe your product. Get an idea of what others have to say about it.
2. Ask a Question
In any presenting capacity, it’s often effective to engage your audience by asking a question. For example: “Are you familiar with Uber?” The obvious answer here is yes, and now you can follow up with something like “we want to be the Uber of parking in major cities.” It could be anything. This allows you the pitcher to get your concept across quickly and effectively, which more often than not leads to followup questions.
3. Be Calm and Listen
After your postured up and got your short and sweet message across, it’s time to listen carefully. One common pitfall is giving into the urge of rambling about the details of feature A, B and C and how they will change the marketplace forever. Before you speak, understand that if they want to hear more, the investors will ask. Only talk about your features and numbers when you are asked to do so. Beyond looking professional, doing this is a matter of respect.
There are many early-stage growth companies sprouting from rich, plush entrepreneurial soil. But as the number of those sprouts rise, it can become harder to identify which ones will one day wear the thorns. Luckily there are many hints on the surface that can save you from getting pricked. Here are four red flags to avoid before investing in your next early-stage growth company.
1. High Burn Rates
If revenues are not steadily rising on a month-to-month basis, watch out for overhead and high expenses. Profitability always prevails as the single most important thing in business and as such, the very first dollar the company is able to generate is extremely important.
2. Lack of Support From Early Investors
If the company has already raised capital in their earliest stage, it can be very telling if the majority of investors are not reinvesting. There are many reasons for such an outcome, but you need to nail down why. Maybe the investor(s) simply ran out of capital to contribute, or maybe there’s something else. The key is to learn the reasons behind the facts.
3. Too Many Founders
Now, it’s okay if a company has more than one founder, and actually, it’s preferred by many in the investor market. It’s hard for just one founder to attract enough A+ talent to run a well-oiled machine firing on all cylinders. However, be cautious when the number of founders climb over three. With so many egos left to handle the growth and execution of the business, the growth process can actually lag and even come to a stop. The saying “too many cooks in the kitchen” has long-survived for a reason and it would be remiss to not make mention of it here.
4. No Momentum
When you take a look an investment opportunity, sift through the long-winded numbers and charts and identify what the main metric for growth is. If the metric is not growing at a decent pace (or at all) month-to-month, you can be sure that the investment will carry some risk. But that doesn’t necessarily have to be the nail in the coffin, sometimes all it takes is just a few small and inexpensive tweaks to get the ball rolling.
It’s never been easier to start a business, and with the growing access to funding portals, it’s never been easier to raise capital. Having said that, never has there been more competition than there is today. With that in mind, we want to offer four secrets to pushing your early-stage growth company ahead of the growing and bustling crowd.
1. Crafting a Lean Business Plan
Remember those big, bulky, text-heavy business plan documents? We have happily moved on to a time when those are no longer necessary. As such, avoid having a document such as this. Investors and partners now opt to look only for a framework of your business. They will delve into the essentials of the business within the context of your product, solution in the marketplace and financials. Forget the big document, just be sure you can fill in those blanks.
2. Incorporating a Business Entity Early Through Online Services
Create a C-corporation online and do it quickly. Not only can this be done at low cost, it also saves time waiting for an outside attorney. It’s a great idea to do this before you decide to raise capital and bring on partners.
3. Establishing Your Brand Social Media
The obvious benefit here is cost – it’s nearly non-existent. Building an online image is a process and this should be started even before you develop your product. By doing this you can track early customer feedback and find where to make appropriate pivots in the marketplace (if necessary).
4. Measuring Progress With Data & Analytics
First, set your milestones and aim for them pragmatically. You don’t have to be heavily funded to get access to comprehensive data, customer analytics and metrics. Measuring early not only impresses potential investors, it’s also the first step to having a better control over your business.